WTO says Airbus benefited from unfair European subsidies

The World Trade Organisation has ruled that some subsidies paid by European countries to help develop the Airbus A380 jet were "illegal", according to a Wall Street Journal report. But European sources say the US complaint was only partially upheld.

AFP - The World Trade Organisation has ruled that Europe's Airbus benefited from illegal subsidies, US and European officials said Friday.

A US lawmaker and European sources confirmed some of the main contents of the decision which comes amid a bitter battle with Airbus's US rival Boeing, but which was not publicly released.

But European sources said the interim WTO ruling indicated that the US complaint against Airbus, a unit of European Aeronautic Defence & Space Co., was only partially upheld by the global trade watchdog.

"For many years we have contended that direct financial assistance from the European governmental partners of EADS/Airbus has represented an unfair launch subsidy that has allowed Airbus to increase its market share in the large civil aircraft market and to steal US aircraft manufacturing jobs," said US Representative Norm Dicks.

"Today's interim ruling from the WTO panel definitively confirms that contention, which was the basis for the WTO complaint filed by the US Trade Representative filed in October 2004," said Dicks, a Democratic lawmaker from Washington state, where a key part of Boeing's manufacturing operations are based.

Dicks said "all Airbus aircraft have received illegal subsidies and that these have caused material harm to Boeing".

The WTO verdict was contained in a report of around 1,000 pages, with hard copies only going to EU governments and the US government.

A European source confirmed to AFP in Brussels that "some elements" of the original US complaint to the WTO on the matter were upheld by the Geneva-based global trade body.

The Wall Street Journal reported Friday from Brussels that the WTO concluded that every launch-aid package given to Airbus for the development of its A380 double-decker long-range airliner was an illegal subsidy.

But, rebutting part of the Journal report, the European source added that funds extended to Airbus for the A380 "were not considered illegal in their totality".

"The EU launch aid has not been considered as a (support) programme," the source added, referring to a key part of the dispute.

Boeing executives said before the ruling that they hoped it would stifle future state aid for Airbus, particularly for the planned A350 airliner, for which France, Germany and Britain have already pledged about 2.9 billion euros (4.2 billion dollars) in launch loans.

Another European source, who spoke on condition of anonymity, said: "From our reading of this report 70 percent of the US claims have been rejected."

However, government grants were ruled illegal, he added.

"That'll have an impact for the next case," the source claimed.

Another WTO ruling is pending on the EU's tit-for-tat complaint against Washington over US state aid to Boeing, which is being dealt with by the Geneva-based trade body separately.

The WTO does not publish or comment on interim rulings, which are only issued to each side in the case on a confidential basis.

US and EU trade officials declined comment.

In the case brought against the EU in October 2004, Washington charged that it illegally provided subsidies to Airbus.

It said an accord that allowed Brussels to provide up to a third of development costs of new airliners was no longer valid since Airbus is now a major industry player and not the fledgling firm when the deal was struck.

While Airbus and Boeing are implicated in the case, the WTO only deals in cases brought by its member states and not individual companies.

The cases are some of the most complex to reach the international trade watchdog in Geneva.

Some analysts said a clear-cut judgment was unlikely given the complexity of the EU-US disputes over their flagship plane makers.